Tag Archives: IIT

PAYING EXPAT COMPENSATION OUTSIDE CHINA
Jul. to Sep. 2015

It’s a common situation.

Mr. Lin, a U.S. citizen and chief representative of ForCo’s representative office in Shanghai receives his salary from abroad. So does Mr. Schmidt, an entrepreneur, who has built a thriving business making laser products in China and selling them to the U.S. His Hong Kong sales company pays him a large salary. Ms. Zhou, an Australian citizen living in Beijing and working on contract for ForCo has her salary remitted to an account in Hong Kong. All three have resided in China for more than a year. Mr. Lin and Mr. Schmidt arrange for nominal salary payments in China, on which they pay Chinese individual income tax (“IIT”). Ms. Zhou does not report income for her contracting work or pay IIT on it in China. Continue reading

IIT ON INDIVIDUALS’ ASSET CONTRIBUTIONS TO EQUITY
Jul. to Sep. 2015

Through a series of notices, the State Administration of Taxation (SAT) has taken the position that an individual’s contribution of non-monetary assets in exchange for equity is subject to individual income tax (IIT) at the time of contribution to equity. Since the value of such assets may have substantially appreciated, SAT Announcement [2015] No. 20 permits taxpayers to amortize IIT on gains from the appreciation over five years. Continue reading